Sen. Charles E. Grassley, R-Iowa, wants President Donald Trump to take a hard line with Democrats if they push to renegotiate a proposed trade pact to replace NAFTA. (Tom Williams/CQ Roll Call file photo)

The new chairman of the Senate Finance Committee said he would advise President Donald Trump to take a hard line with congressional Democrats if they push to renegotiate the proposed trade pact that would replace the 1994 North American Free Trade Agreement.

Chairman Charles E. Grassley of Iowa has told reporters that he would encourage Trump to begin a formal withdrawal from NAFTA if Democrats insist on renegotiating the pact’s replacement — the proposed United States-Mexico-Canada Agreement, or USMCA.

Democrats have said they are concerned with the new agreement’s labor and environmental provisions. Grassley said side letters to clarify positions or provide more details on what the provisions will actually do or other steps could be used to remedy shortcomings in the pact.

Grassley said the six-month withdrawal process would put pressure on Democrats to either back the proposed agreement or leave the U.S. without a regional trade agreement that supports $1.2 trillion in business a year.

“I don’t have any way of judging how hard-nosed certain Democrats that have said USMCA hasn’t done enough on labor or enough on environment. I’d want to sit down and talk to those Democrats and see what they have in mind,” Grassley said. “They surely can’t have in mind renegotiating.”

“If they’re reaching the point where you got to go back to the negotiating table, I would encourage the president to pull out of NAFTA and hope that they are smart enough not to let that happen,” Grassley added.

Trump signed off on the proposed agreement with Canada and Mexico on Nov. 30 but lawmakers can’t vote on it until the administration sends the implementing legislation to Congress.

NAFTA was one of several trade issues Grassley addressed during his first press briefing as chairman of the Finance Committee, which oversees trade, taxes and health care.

Grassley reaffirmed his long-standing support for importing lower-price drugs from Canada, and shortly after addressing reporters Wednesday, he unveiled a draft bill to do so.

Tariffs

While Grassley backs Trump on some of his trade policies with China, he said he would oppose any push by Trump to have Congress give the president more authority to impose tariffs on imported goods. Bloomberg News has reported that Trump could float the idea during his Jan. 29 State of the Union address to a joint session of Congress.

Grassley has questioned Trump’s imposition of aluminum and steel tariffs on most imported foreign-made products. Trump had the authority to impose a 25 percent tariff on steel and a 10 percent tariff on aluminum under national security provisions of Section 232 of the Trade Expansion Act of 1962. The administration used Section 301 of the Trade Act of 1974 to impose tariffs on Chinese imported products valued at $250 billion.

Grassley said he planned to discuss the tariffs with the White House because he believes they should be lifted on Mexico and Canada. Both countries have slapped retaliatory tariffs on selected U.S. products. He said Mexican tariffs on pork products were hurting farmers in Iowa, a top pork-producing state.

Grassley said the Trump administration used the tariffs to prod Canada and Mexico to finish the NAFTA revisions and he does not see any reason to continue the duties. He said the president could build support among agriculture groups for the proposed NAFTA replacement by ending the tariffs on Canada and Mexico.

Crucial ag support

He said agricultural support for any trade agreement is crucial because farm organizations are good at mobilizing lawmakers.

That’s something Grassley said that the administration and the European Union should keep in mind as they prepare to launch trade talks this year.

EU Trade Commissioner Cecilia Malmstrom met with U.S. Trade Representative Robert Lighthizer this week in Washington. The EU delegation in Washington tweeted comments from Malmstrom that agriculture would not be part of the U.S.-EU negotiations.

“We’re willing to include tariffs on all industrial goods [in trade talks with the U.S.] but we have been clear that from the EU side we won’t discuss agriculture, like the U.S. side won’t discuss public procurement & geographical indications,” the Malmstrom tweet said.

Grassley, who met with Malmstrom Wednesday afternoon, said, “I don’t know how anybody in Europe that wants a free trade agreement with us can expect it to get through the United States Senate if you don’t want to negotiate agriculture.”